Breaking: Apple Announces HUGE iPhone Price-cut, Now Just $399

The title says it all, Steve just announced a major price cut in preparation for holiday sales. Retail price of the ever popular 8GB model, because let's face it no one buys the 4GB model, has been slashed from $599 to...wait for it...$399. Yeah, I know, I just wet myself too.

Reader comments

Breaking: Apple Announces HUGE iPhone Price-cut, Now Just $399

This is a copy of the email I just sent to Apple. I suggest that others might do the same.
Steve or to whom it may concern,
As a loyal iPod owner (family has four) and a iPhone 8mg owner I am offended at the price break!
First NBC tells me that I am a crook by saying that what is on my iPod/iPhone is stolen (paraphrased) ... and now ... Steve says "f-you very much" for being willing to be leading edge and buy your new product (and switch to an inferior carrier).
So much for thinking Apple was a cut above the others!
You have just taken the "glow" off the faces of about 1 million people! Now, each time they reach for their iPhone they will think about how they got screwed by the industry design leader versus how happy they are with the device. More important, the next time that 1 million people go to spend a couple grand for an Apple product they will think twice ... that is 2 billion reasons (each worth $1.00) to do something to "right" the "wrong".
I am sure lawsuits will follow, class action I hope, and unfortunately I will be only too glad to join.
Steve, you and Apple are better than this ... step-up and show some class.
At least provide me with an explanation.
Sincerely,
Mark

Mark, no offense but you're barking up the wrong tree here. Paying a higher premium to be first in line for new tech comes with the territory of being an early adopter. It's what I affectionately refer to as early adopter tax. I'm not condoning it, mind you, but it simply how the game is played.
Condemning a company for cutting prices months after product launch is just silly. If you wanted the iPhone at a lower price point you should have waited. I had to pony up $600 for my 8GB model, and yeah it kind of smacks me right in the rump to see the price fall to $400, but I expected that going in, so it comes as no shock to me.
The price of being an early adopter isn't cheap, unfortunately.

Mark, I'm with you. I'm going to start a thread on the Apple discussion forum, as soon as they have the balls to put them back online, demanding a $200 Apple gift card. They did this with Aperture, now they need to do it with the iPhone. I feel ripped off. I hope Steve enjoys his new yacht or whatever he bought with our money.

If you break down the price difference this comes down to $100 per month between product launch and today's price cut. That's quite a premium to pay for the privilege of owning one of the first generation iPhones.
At this price point I wonder what profit margins Apple is getting. Component costs must have fallen sharply to allow a $200 price cut in just two months of inventory sales.

It will be interesting how the "loyal" Apple followers will react to such a drastic pricedrop. I immediately felt like jilted as an owner of the 8GB iPhone. It's only been 2 months since the first release. However, on the other side of the coin, how mad would current iPhone owners have been if they had released say a 16GB iPhone today. Perhaps this is step 1: devalue the 8GB iPhone; weather the "storm" of pissed fanboys.

Kent, I must disagree.
I personally bought my iPhone just over two weeks ago, and since there has been a considerable drop in the price of the iPhone between then an now, I DEFINITELY feel like I've been ripped off.
I also disagree on your $200 dollar "early adopter tax". That philosophy is rediculous. Sure, there are plenty of products with high prices that eventually lower as they are on the market longer. Take for example the PS3. It was $599 at launch, and now almost a year later, dropped to $499. Those kind of price reductions are expected. But a drop to $399 only two months after release is REDICULOUS!!!! That's a drop of 33.3%!!! Nothing drops in price that much only two months after release (except maybe "Cabinboy" on DVD)!
I'm going to go back to the AT&T store and demand a refund. Heck, even with a 20% restocking fee, I'm still going to save money.... IF they even agree to allow the transaction to occur.
I'm pissed!

This price drop is only possible because of the popularity of the phone at the original price. Either the iPhone was worth $600 to you at the time you bought it, or it wasn't. If it wasn't, you were foolish. If it was, what are you complaining about?
Are you going to whine when you buy a 2nd generation iPhone and it's less than $600? I suppose you will. Apple will have cheated you by reducing their prices.

I am very happy with my iPhone. (Not nearly as happy with AT&T.) However, Apple should not expect me to be an early adopter next time they launch a product. I suspect this will be the case for many people. If so, their next product launch, no matter how great the product, will be a failure, because nobody will want to be made a fool of.

$200 is too much. The question here is not "Why there is a $200 price cut?" rather "what is the answer to people who waited hours long in the line, who love apple products and ready to pay off high price?". I believe not everybody who bought iphone were happy to sign the 2-year contract with ATT. Many of us took the contract just because of iphone and its features. If this is going to be the case, i can expect that nobody will be ready to buy any of apple's products during the first few months of its release. Many people who do not have iphone laughed hearing this news. They think those who got iphone were too hasty, fools and if apple agrees with this then the company will see a big loss in future just because there will not be many apple lovers. If a $200 price cut will not be a huge loss for apple then repaying the $200 to their early iphone customers shouldn't bring any loss to them either.

Kent,
I have paid my fair share of the early adopter tax with mobile devices, but a 33% price drop in just two months is unprecedented and breaks the "trust" we have in early adopter price drops. I would have expected to see a drop of $50 to $100 by November, based on Apple's track record and the industry "standard".
I was hesitant about buying the iPhone due to the AT&T contract, but did it because of Apple's great design. Now that Apple kind of slapped me in the face, I don't feel as happy with my purchase and monthly payments to AT&T and Apple and am actually considering dropping AT&T.
I think Apple should at least make a statement to the early adopters about the price drop. How about a free copy of Leopard? I understand they had to drop the price due to all their other new iPod announcements, but man they must have really overpriced and gouged us with the $599 price and that just feels a bit dirty.

oh come on. I bought it a month ago. $200 is a steep "tax" to pay for an extra two weeks of use (if I'd bought it 2 weeks ago I could return it). they f---ed us. heh. I'm a pc user...this was my first apple product. hate to tell you this..but Microsoft doesn't pull that s--t. they wait a decent interval. I thought they might introduce a 16gig iPhone for $700 or even $650 now...or an iPhone nano for cheaper. either of those would have been fine...differentiated products. but you don't f--ck your early adopters like that. I was an early user of Vista, Microsoft offered price breaks and deals to us. ditto for Adobe and lightroom.

I also feel ripped off here. This is not acceptable to me. I bought my 8 gig 19 days ago. So 5 days after my return period is over they drop the price $200?
This robs me of a lot of my enthusiasm. Where do I send an email about this?

Count me in on the currently very unhappy list. Watching the blogs with updates from this event made me feel like I got kicked in the stomach. Not to mention making me pay a buck to make a ring tone. Here are 200 more reasons to not buy a ring tone.

The only thing announced today that pisses me off is the fact that the iPod Touch doesn't have the recessed jack like the iPhone. Why the hell do the iPhone users have to suffer with the crappy design? That is the worst design aspect of the iPhone.
Jeff

Hey,
Great comments and feedback!
I get the "early adopter tax", I still believe it was worth what I paid, and I was in the consumer products industry for 16 years and the software industry for 8 years. I understand sales and marketing strategy ... I also know that being innovative in how you treat your customers can be worth millions/billions. A simple discount worth $100 on future purchases would generate more positive buzz than it cost and set a precedent that would cause others to take notice ... much like the design precedents Apple sets daily.
Additionally, as consumers we must stop acting like sheep being herded by a dog. Companies need to know it is not OK to stick it to the consumer and expect us to be loyal regardless.
I do not expect to get anything from Apple ... however, I will think twice about future purchases for my family and my start-up business. And yes, Apple does design and build better products on average ... but, there are some items where the coin toss will not go Apples way for awhile.
Finally, 33% discount after 60 days ... come on ... that is what you expect to see from desperate companies with technology flops! Lower the price $100 September 1st and another $100 on November 1st might send a different message to the market and consumers. And before you think I am crazy ... look at Apple's stock price today ... down 4.88% ... which means the other professionals are questioning what and why.
Hold it!
Before someone else says it, yes, this dip is a good time to buy.
For those that asked, I sent my email via the Apple site's contact us link in the iPhone sub-section.
Cheers,
Mark

Count me as another disappointed, long-time Apple customer. Apple has just punished us, the people who promote and embrace Apple products. To say I'm upset is an understatement. And now to find out that the music I have already purchased will cost me even more to turn into a ring tone? Come on, Apple. You're better than this.
A very disappointed Apple devotee

the ringtone thing I'm fine with. a. it's 99 cents. b. more precisely, legally, apple doesn't own the right to make those songs into ringtones. they have to pay the music folks extra...which is why we have to pay extra. that's fine.
it's the $200 that sucks.

If you think you got screwed, this is probably just the first round. I use and like Apple, and I plan to get an iPhone. My Verizon contract runs out at the end of November.
I have a sneaking suspicion that the next cut will be the 3g iphone released fairly soon. They must be making one for Europe and Australia.
Then this new cheaper iPhone will also be an inferior iPhone. As I said, just a suspicion, but the iphone is more than a phone and ipod, it is supposed to be a cutting edge portable Internet instrument, and it can't do that with old technology.
The price of the new phone will be back up at $599, which will offer some consolation to those that purchased the $399 EDGE model, and will also make Wall Street happy as profit margins will edge back up.

As others have already said, this sucks.
On a popular $599 electronic item:
-A 10% ($60) price drop within 6 months is generally expected
-A 15% ($90) price drop within 6 months would be accepted if there was sales problems
-A 33.4% ($200) price drop in ~67 days is WELL WELL WELLL WELLLLL OUTSIDE the expected (keyword: expected) product maturation price drop
Make No Mistake - We are NOT pissed because this product's price dropped. We ARE pissed because you dropped it so SIGNIFICANTLY in such SHORT time.
Again, I agree, that is the last time I purchase Apple hardware at launch pricing. I was willing to accept the normal product maturation price drops (or even above normal), but Apple clearly showed that they have no problems gouging with launch pricing and then dumping price to pick-up sales; how else can you explain a 33.4% price drop so quickly?
Bitter.

Man we have a lot of whiny bitches posting today. No one put a gun to your head and forced you to buy the iPhone on the day it came out. I can't believe that some of you are threatening to sue. I think apple fcked up on their sales estimates and this was a knee jerk reaction. Any dumb ass could have predicted this price cut. Heck, by christmas time the price may dfop another 100 bucks

Here's the letter I just e-mailed to Apple:
Subject: Wait, did Apple just F*ck me?
To whom it may, or may not concern:
Now I anticipated the price of the iPhone to come down…but $200.00 in just two months? Ouch! I can’t help but feel like I’ve been swindled. Apple people, you’ve really let me down here. I held Apple, Inc. in pretty high regard and now I feel a little ashamed. Suck! I had no fewer than 6 people today, none of whom own ANY Apple products, tell me that I was more or less a dumb-ass for purchasing an iPhone shortly after it was released. What the hell do you say to that? “It’s been worth it?” “It’s been worth $200.00 to have an iPhone 2 months before everyone else?” I can’t say that, because it hasn’t. Don’t get me wrong, I like the phone, it’s nice… But today, I like it less… I feel resentful and stupid for not waiting. -I feel like I can’t trust you anymore.
I don’t expect a $200.00 voucher or anything, but at least you could take me out for breakfast. I mean come on Apple; it’s the polite thing to do after you work someone over. So please, write me back and maybe we can arrange breakfast. I’d prefer to go anywhere they serve my favorite… cheese blintzes topped with a delicious $100.00 iTunes gift card! Yummm.
Sore,
Anthony

YOU CAN'T HAVE YOUR CAKE AND EAT IT TOO.
People please.... anything ever sold has operated on a similar pricing structure. being first consumer always comes with a premium. Mark, you of all people should not now whine about a price cut. you enjoyed the exclusivity of being first, you're a grown man, don't cry about what you chose to pay for it. with the holidays rapidly approaching this is a smart move for apple. look at all the free buzz being created by this cut. a lot of fence sitters are going to jump. 600 bucks was a lot of money, 400 is a better price point for first time adopters as they get ipod/phone in one. i personally cannot stand att and their very poor customer service. i will wait another year to see what develops and undoubtedly reap additional price rewards. bottom line, stop crying on your phone; all those tears may short it out.
ken
mac pro quad/ati 1950/raid o/4gb ram
mac mini 2ghz/core 2 duo/2 gb ram (i waited :-)

First to Kent ... thank you for hosting this blog! While I doubt that Apple's move was solely a result of the blog, I am sure the airing let the Apple VP's know that their move was extraordinary harsh to say the least.
Second, to most of the people who kept their frustrations in check and kept the content clean and mature ... executives are more apt to listen and reconsider.
Third, to Ken, what you call a whine I call floating an idea and the financial implications that could be embraced. The blog and the email that went directly to Apple were two outlets to get an ear. As you know, telling some directly they are wrong never works as well as suggesting an out.
Net, once again Apple has "set the bar"! :-)
Cheers,
Mark
PS-The way I look at it, Leopard is all but paid for!

Yes, it's f@#ked-up to have a price reduction of $200 in two months, however, that is the price you have to pay for being an early buyer in new technology. I'm pretty sure you knew the price was going to drop in the future; weather the price drops in 2 months or 14 months, the fact is you still $200 out of pocket. Of course it would be better if it wasn't in 2 months but the end result is the same. I hope you do realize this is the 1st generation of IPhone, and when you purchased it, you were the guinea pigs to see how this 1st generation works. I guess you will be pissed off if Apple comes out with a new generation next week....hey, that comes with the territory and I hope you realize it could very well happen. You need to stop whinning and suck it up (I'm sure you thought the IPhone was worth it when you purchased it), you knew this from the beginning ($200 out of pocket now or a year later still $200), I think all the fuss is not about the $200, it's about you having the exclusive of new technology for two months vice a year...that's what it's all about, you are pissed off because the guy next to you may very well be using the same technology for less of the cost, forget about the $200, it would had felt better to have the exclusive technology for year vice only 2 months.
If you learned your lesson good for you, and as far as you becoming a dissatisfy Apple customer, I do not think Apple would even care too much (they already got you for two years), the truth is 6 or 12 months down the road people won't remember this episode (you probably will) and as soon as they come with something new, there will be new suckers willing to pay the high price. Let's not go too far, even after this incident I bet you Apple will sell the new IPod touch like crazy (and yes there will be new suckers for this product too), and with the new IPhone price before the holidays they will make a killing. It's nice you'll get $100 back now, but, I hope you learned your lesson and stop whinning.
JEGA

I cannot believe all the cry-babies blabbing their sob stories over Apple lowering the price of the I-Phone. Did I buy one at $599? No way. Will I buy one now? Probably. And when I do, I'm going to laugh and jump for joy and rub it in the faces of all you idiots who ran out, bought the phone on the day it was available, and bragged about how you were the first to have the latest and greatest. Its the price you pay to have the newest stuff before anyone else. Apple should have never even considered apologizing for lowering the price of the phone. I can't even believe they are giving refunds. You people are lucky to be given anything at all and yet its still not enough. Grow up and get over it.

As Paul says, it is indeed rich to watch all these show-offs who waited in lines like geeks to buy the iPhone, turning into crybabies. Call the waaaaaambulance. How about rearranging your lives a bit and becoming a little more skeptical of the consumer electronic business instead of brainlessly participating like Pavlov dogs. You people got what you all deserve for being so unquestioningly materialistic. Aw, boo hoo hoo.

No crybaby here. As I said in my first comment, my long years as an early adopter of technology has tempered me to these sudden price changes. It comes with the territory. You play…you pay, literally.
My reason for chronicling early adopter outrage is because I support my readers. I don't want to come off sounding all unicorns and rainbows here, but I give a shit (excuse my bluntness) for the people who visit my blog, particularly loyal readers. Needless to say when my inbox begins flooding with angry email (directed at Apple) and I see familiar names in the comment threads voicing frustration, you better believe I'll take up their cause even if it isn't my own.
Now, in no way do I claim to be the catalyst that compelled his majesty, Steve Jobs, to make amends with first generation users - that was primarily a fiscal decision to appease Wall Street and analysts. However, based on site traffic, a good many hits originate from Apple.com, so more than one person at Apple frequents this site.
Bottom line: I rarely moderate comments, and you guys are absolutely free to speak your mind, even if it is against one another. But I take this matter very seriously, for or against Apple’s policies.
Either way, thanks for commenting. I appreciate you guys.

All these years as a loyal Apple supporter. Friends asked me why I didn't wait for the price to drop when I bought the Iphone. I told them that Apple doesn't drop their prices. I feel like an idiot and I don't want a store credit. I'm not buying any more overpriced Apple products.

Jeez Louise I bought the 4 gig and hey I am a 54 year old father of two who is relatively hip. I mean like I have about 300 tunes on my I Phone but hey........ If I get my 100 Jobs Bucks and there is a 4 gig phone for say 299.00 and Apple will let me redeem my Jobs Bucks on the phone then hey you clowns .. I get a 4 gig phone for 199.00 Wow that is a better deal than Mens Wearhouse " I gurantee it "

This is really frustating to know that something I bought 1 month ago for 599 now is selling for 399. Have APPLE forgotten about the big line and long waiting time and the risk involved in getting the iphone for the first time. I believe that this is a fraud act from APPLE to all the consumers who are the early adopters of iPhone. APPLE should not only refund the $200 but also apologize to all the early adopters of iPhone. If they don't do that we the all unsatisfied iphone people out there can file a case against APPLE.

It appears that you've put a good amount of effort into your article and I want a lot more of these on the web these days. I truly got a kick out of your post. I do not have a bunch to to say in response, I only wanted to register to say special work.